According to the CME FedWatch Tool, the probability of a June Fed rate cut fell from 20.7% to 18.8% on Tuesday, April 16. On Tuesday, April 9, there was a 56.1% chance of a June Fed rate cut.

Bets on a September also turned less dovish The probability of the Fed leaving interest rates at 5.50% increased from 28.6% to 31.5% on Tuesday, April 16. On April 9, the chances of the Fed leaving interest rates unchanged stood at 8.5%.

While Fed speakers will draw investor attention, news updates from the Middle East also need consideration.

Short-term Forecast

Near-term trends for the USD/JPY hinge on central bank chatter amid falling bets on a 2024 Fed rate cut. However, news updates from the Middle East also warrant investor attention amid threats of retaliation against the Saturday attack.

USD/JPY Price Action

Daily Chart

The USD/JPY sat well above the 50-day and 200-day EMAs, confirming the bullish price trends.

A USD/JPY break above the April 17 high of 154.722 could support a move to the 155 handle.

Trade data from Japan, the Japanese government chatter, Middle East-related news, and central bank commentary need investor consideration.

Conversely, a USD/JPY drop below the 153.5 handle could give the bears a run at the 151.685 support level.

The 14-day RSI at 79.40 shows the USD/JPY in overbought territory. Selling pressure could intensify at the April 17 high of 154.722.